Mining investors reluctant to sign contracts with regional governments

About 25 mining investors have delayed their investment in Indonesia because they are reluctant to sign contracts with regional governments.

Local mining businessman Yusuf Merukh was quoted by Kompas as saying on Monday that the investors, who hail from the United States, Canada and Australia, planned to invest a total US$10 billion to explore and develop mining resources mostly in the eastern part of Indonesia.

Under the autonomy laws implemented last year, mining investors have to sign contracts regional governments which have been granted a broader authority to manage their political and economic affairs. Previously, mining investors signed contracts with the central government.

According to the investors, Yusuf said, mineral resources are the domain of a central government, which can not be delegated to regional governments.

Furthermore, he said, the contracts signed by regional administrations were not bankable, which means the investors could not use the contracts to secure credits from banks. (*)